Regulators

TRAI reiterates earlier view, opposes partial auction of 2100 MHz

NEW DELHI: The Telecom Regulatory Authority of India (TRAI) has opined that clubbing the 2100 MHz band spectrum with the spectrum of other bands for auction in February will be defeated if sufficient spectrum is not made available in the 2100 MHz band.

“A split auction of 2100 MHz (one in February 2015 and remaining, say, in December 2015 after availability from Defence Ministry) will artificially increase the market price of 2100 MHz in February because of the severe supply constraint. The 15 MHz of spectrum in the 2100 MHz spectrum being vacated by Defence Ministry should be auctioned in view of the in-principle agreement reached with MoD, even if it is not available immediately,” TRAI said today.

The Authority reiterated that in the upcoming auction of 2100 MHz band spectrum, an auction-specific cap should be placed that no bidder would be permitted to bid for more than two blocks in a local service area (LSA) if three to four blocks are available in that LSA.

TRAI said there is no change in the reserve prices for spectrum in the 2100 MHz bands from what were recommended earlier.

It said the Department of Telecom is responsible to ensure that the spectrum being auctioned is either interference free or to share information upfront about the areas where interference is likely to occur so that the telecom service providers participating in the auction can take informed decision.

These views were given to the DoT in Clarifications/Reconsideration of Recommendations on 'Valuation and Reserve Price of Spectrum: 2100 MHz Band.’

TRAI had sent its recommendations on 'Valuation and Reserve Price of Spectrum: 2100 MHz Band' on 31 December, 2014 to the DoT. On 8 January, 2015, the DoT sought clarifications/reconsideration on many of the recommendations.

After considering the comments given by the DoT, TRAI has furnished its response to the Government. The Authority, has reiterated its earlier recommendations with detailed reasoning.

As highlighted in the Authority’s recommendations on ‘Valuation and Reserve Price of Spectrum: Licences Expiring in 2015-16’ dated 15 October, 2014, it is vitally important to auction spectrum in the 2100 MHz band along with spectrum in the 900 MHz band. The same sense of urgency was echoed by the DoT when, through its letter dated 27 November, 2014, it requested TRAI to expedite the process for its recommendations on the reserve price of 2100 MHz band and related issues so that the auction of spectrum being released by Defence could be conducted along with the auction of spectrum in the 800 MHz/900 MHz/1800 MHz bands scheduled to be held in February 2015. Heeding DoT’s request, TRAI delinked the 2100 MHz band from other bands - 2300 MHz and 2500 MHz band - which were part of the DoT’s reference of 16 October, 2014, and issued its recommendations specifically for 2100 MHz band on 31 December, 2014.

In its back-reference of 8 January, 2015, the DoT has not indicated the exact amount of spectrum in the 2100 MHz band that will be put to auction. However, media reports suggest that only 5 MHz is likely to be put to auction. The swapping of spectrum leading to release of an additional 15 MHz will be carried out later after the DoT notify the Defence band.

Quoting the Communications & IT Minister, the media has reported that the notification is likely to be done in the next 45 days. Media reports also mention that the swapped spectrum in 2100 MHz may be put to auction in December 2015.

These media reports are neither a positive development nor particularly encouraging. The whole purpose of clubbing the 2100 MHz band spectrum along with spectrum of other bands for auction in February 2015 will be defeated if sufficient spectrum is not made available in the 2100 MHz band. Moreover, it was emphasized by the Authority that, if swapping has been agreed in principle, the spectrum can be put to auction and the actual assignment made after the auctions viz. once the release of spectrum is cleared by MoD. This remains a distinctly feasible option because time is on DoT’s side: actual assignment can wait till end 2015, close to a year away.

The MoD has informed TRAI that the proposal for release of 15 MHz of spectrum in 2100 MHz band on a pan-India basis in lieu of an equal amount of commercial spectrum in the 1900 MHz band has been agreed to in principle and this has also been conveyed to the DoT. In its back-reference, the DoT has not assigned any reason for not putting this spectrum to auction in February 2015. In the absence of any plausible reason to hold back this spectrum, the Authority is not in a position to review its recommendations and, therefore, stands by them.

The Authority would also take this opportunity to sound a note of caution. If media reports are to be believed and if spectrum is auctioned in two chunks, one in February 2015 and remaining, say, in December 2015 after availability from Defence, the result would be a split auction. A split auction of 2100 MHz will artificially increase the market price of 2100 MHz in February 2015 because of the severe supply constraint. What is more, that will then become the anchor price for the next 2100 MHz auction. This situation can be averted by putting all the available spectrum for auction in February.

The full text of the response to the Government has been placed on TRAI's website www.trai. gov.in